Bitcoin: Textbook Bearish Divergence 1D (Jun. 07)

X Force Global Analysis:


Bitcoin has been trading sideways for a while, confusing both bulls and bears in the market. However, we have spotted technical evidence as to why this current sideways movement should be interpreted as a distribution phase before a drop.

Bearish Evidence

- The first thing we note is the clear bearish divergence on the daily chart.
- Prices are creating higher highs, while indicators create lower highs
- The Relative Strength Index (RSI) is in a downtrend, showing a lack of strength
- The Moving Average Convergence DIvergence (MACD) also shows weakened momentum through its histograms
- The volume is decreasing overtime, indicating that this could be a potential phase of distribution
- However, it's important to note that significant supports still remain intact
- Prices are trading above the 20 Simple Moving Average (SMA)
- The major ascending trend line support is still valid

Market Sentiment:

Long short ratios are at 67 to 33, with significantly more longs than shorts in the market. Despite the bearish technicals and lack of bullish momentum, the market sentiment remains dominantly bullish.


What We Believe

We have previously mentioned that a break and close above 10.5k was necessary for a bullish confirmation. While we have tested resistance numerous times, we have failed to break above, and as we trade in a sideways rally, more bearish technicals arise. Just as for the bullish case, a break and close below 8.8k is essential for a bearish correction.

Trade Safe.